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President Barack Obama's State of the Union Speech and Congressman Paul Ryan's response were strangely missing a focus on the key to restoring America's future: an agenda for economic growth.

We need this agenda because a growing economy:

Expands the tax base and therefore is a critical source of revenues for governments at all levels. It is an essential component of restoring fiscal balance to not only the Federal government but to state and local governments as well.

Provides the background condition in which government can be right-sized by reducing the demands for government services and safety net, while at the same time offering employment opportunities for those who may face public sector layoffs.

Is the necessary condition for -- and also evidence of -- expanding opportunities in which individuals and families have the greatest opportunities to pursue their dreams and to thrive in liberty.

The basis for a bi-partisan growth strategy can be brought into focus by combining five proposals made by either President Obama or Congressman Ryan.

Reduce the Corporate Income Tax Rate.

The United States now has one of the highest corporate income tax rates in the world. This encourages companies to locate their most profitable operations outside the U.S., and their least profitable operations within U.S. borders.

A high corporate tax rate thus puts American workers at a disadvantage in the global competition for jobs and makes them more vulnerable to job losses in the event of a downturn in their company's business. Low profit operations are least likely to expand and in an economic downturn are most likely to be cut back or eliminated.

The elimination of many deductions and all tax credits should be used to facilitate the greatest rate reduction possible in this growth destroying tax. A lower corporate tax rate makes every deduction less important. And, all business tax credits are in actuality a form of government spending on politically favored corporate activities.

Reduce the Regulatory Burden.

Regulations by their very nature impose involuntary exchanges or prohibit voluntary exchanges among private individuals. Not all regulations are bad, but many regulations are unnecessary or counter-productive.

An obvious place to start would be the repeal of all mandates and subsidies for the use of ethanol. There is now ample evidence that the use of ethanol as a fuel actually harms the environment. Therefore, it makes no sense to mandate the use of corn to feed America's automobiles instead of providing nourishment to human beings, especially at a time when rising food prices are creating political and social unrest throughout the developing world and among the poor everywhere.

A key component of regulatory reform also should be the elimination of regulations that businesses – both large and small – identify as the most significant impediments to the expansion of their enterprises.

Reduce the Barriers to Foreign Trade

Pass the free trade agreements with South Korea, Columbia and Panama. Free trade agreements expand export opportunities for U.S. business while increasing the selection and decreasing the cost of goods and services for U.S. consumers. Both increase jobs, raise living standards and enhance liberty on both sides of the free trade agreement.

To be sure, freer trade means more competition for some U.S. businesses and workers in their home markets. Since the benefits of free trade are widely shared, but the burden of adjustment is narrowly born by those directly impacted by increased imports, passage of these free trade agreements should be accompanied by expanded trade adjustment assistance to workers in manufacturing and service industries.

Reduce Government Spending

Government spending is the ultimate measure of the burden of government on the private sector. In the last two years, Federal government spending has increased by 27% and is now a drag on the private sector's ability to create jobs.

In combination with the $894 billion stimulus bill, this historic increase in government spending has demonstrated that an expansion of government does not increase aggregate demand, but simply displaces private sector economic activity. When the community you are trying to stimulate is the entire country, all of the resources the government spends ultimately must come from the within the community itself. Therefore, for every dollar injected into the economy by government spending, an equivalent dollar had to be taken out of the community in the form of higher taxes or through borrowing.

A meaningful reduction in government spending from current levels would therefore reduce the impediments to economic growth by lifting the burden of government and freeing resources for the private sector to save, invest and spend.

Reform the Tort System

The cost of outsized and unpredictable judgments against doctors and businesses of all kinds is reflected in the price of everything we buy. Tort reform alone would reduce the cost of health care by reducing the practice of defensive medicine, now estimated to cost more than $700 billion a year. A more stable legal system would also make doing business in the United States more attractive for U.S. and foreign businesses alike.

Economic Growth and Budget Deficits

Economic growth is the essential ingredient to restoring fiscal balance at all levels of government.

Strong economic growth would be expected to increase Federal tax revenues to their long-term average of 18% of GDP -- an increase of 3 full percentage points from their current level. That alone would increase Federal receipts by $450 billion a year, or assuming 3% growth, more than $5 trillion over the next 10 years with no increase in tax rates.

In addition, every one-percentage point increase in economic growth would generate an additional $150 billion in national income and incremental tax revenue of approximately $27 billion a year. Maintaining a 1% higher growth rate would add an additional $1.5 trillion in Federal revenue over the next 10 years. State and local government revenues are also highly responsive to an expanding tax base.

The increase in growth made possible by these initiatives also would set the stage for additional growth augmenting policies including reform and simplification of the personal income tax code and restoration of gold as a standard of value for the dollar. Just as important, a larger economy would provide additional resources and flexibility essential to the reform of entitlement programs, including Social Security and Medicare.

Most important, implementation of this growth agenda would restore a future full of opportunity for all Americans to increase their liberty by taking care of themselves, their families, their customers and their communities within the context of enjoying their God given right to pursue happiness.